Upstart (UPST) is one of the best stocks on Friday, up more than 40% at last check, after the artificial intelligence (AI) lending marketplace beat top- and bottom-line expectations for its third quarter and provided a stronger-than-anticipated outlook for its fourth quarter.
In the three months ended September 30, Upstart's revenue increased 20.5% year over year to $162.1 million, boosted by a 30% pop in transaction volume to $1.6 billion. Meanwhile, its net loss widened to 6 cents per share from 5 cents per share in the year-ago period.
"With 43% sequential growth in lending volume and a return to positive adjusted EBITDA [earnings before interest, taxes, depreciation and amortization], we continue to strengthen Upstart's position as the fintech leader in artificial intelligence," said Upstart CEO Dave Girouard in a statement. "Even without a significant boost from the macroeconomy, we're back in growth model."
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The results easily topped analysts' expectations. Wall Street was anticipating revenue of $150.2 million and a net loss of 15 cents per share, according to Yahoo Finance.
For the fourth quarter, Upstart expects to achieve revenue of approximately $180 million, well ahead of the $162.3 million in revenue analysts are anticipating.
"We're hopeful that we'll see macroeconomic wins in the quarters to come, but we're not waiting around for them," Girouard said. "Upstart's mission is simply to improve access to credit, and our strategies to accomplish this goal is to provide the best rates and best process to everybody."
Is Upstart stock a buy, sell or hold?
With Friday's post-earnings surge, Upstart is now up more than 95% for the year to date, but Wall Street remains on the sidelines when it comes to the financial stock.
According to S&P Global Market Intelligence, the average analyst target price for UPST stock is $40.19, representing a substantial discount to the current share price of nearly $80. Meanwhile, the consensus recommendation is Hold.
Financial services firm Needham is one of those with a Hold rating on the mid-cap stock.
"While we are constructive on UPST's growth trajectory over the medium term, we believe that it is still relatively early on in the days of a growth recovery," says Needham analyst Kyle Peterson. "While we expect there to be opportunities for growth investors to add UPST to their portfolios in the event of a pullback in the shares and/or increased conviction that estimates will continue to climb higher, we view the risk-reward as neutral at the current time."
Related Content
-
Is the GOP Secretly Planning a Tax Increase on the Rich?Tax Reform As high-stakes tax reform talks resume on Capitol Hill, questions are swirling about what Republicans and President Trump will do.
-
Can the 'Guardrails Approach' Protect Your Retirement Investments?This investing method helps retirees avoid running out of money, even in a highly volatile market.
-
Social Security Is Taxable, But There Are WorkaroundsIf you're strategic about your retirement account withdrawals, you can potentially minimize the taxes you'll pay on your Social Security benefits.
-
Serious Medical Diagnosis? Four Financial Steps to TakeA serious medical diagnosis calls for updates of your financial, health care and estate plans as well as open conversations with those who'll fulfill your wishes.
-
What Wall Street's CEOs Are Saying About Trump's TariffsWe're in the thick of earnings season and corporate America has plenty to say about the Trump administration's trade policy.
-
To Stay on Track for Retirement, Consider Doing ThisWriting down your retirement and income plan in an investment policy statement can help you resist letting a bear market upend your retirement.
-
How to Make Changing Interest Rates Work for Your RetirementHigher (or lower) rates can be painful in some ways and helpful in others. The key is being prepared to take advantage of the situation.
-
When to Sell Your StockKnowing when to sell a stock is a major decision investors must make. While there's no one correct answer, we look at some best practices here.
-
Within Five Years of Retirement? Five Things to Do NowIf you're retiring in the next five years, your to-do list should contain some financial planning and, according to current retirees, a few life goals, too.
-
The Home Stretch: Seven Essential Steps for Pre-RetireesThe decade before retirement is the home stretch in the race to quit work — but there are crucial financial decisions to make before you reach the finish line.
